Senior citizens and retirees are often targeted for financial scams. Protect yourself and loved ones from elder financial abuse and fraud with these tips.
As smart phones and computers become more essential in daily life and scammers gain skill at deception, the elderly are increasingly being targeted for financial fraud.
The Federal Trade Commission said in a report entitled, Protecting Older Consumers that seniors filed 334,411 fraud reports with the agency in 2020, reporting losses of $600 million, up 36% from 2019. A large part of the increase was due to fraud connected with the Covid-19 pandemic, the FTC said, adding that the vast majority of fraud against the elderly goes unreported.
The top methods used to defraud older consumers were romance scams, up 66% in the year, fraud involving sweepstakes and lotteries, business and government imposters, usually involving phone calls from criminals posing as the Social Security Administration seeking fees or personal information, the FTC said.
"Older people may also be particularly vulnerable due to factors such as isolation, cognitive decline, physical disability, health problems and bereavement," said the Financial Crimes Enforcement Network, part of the U.S. Treasury. An estimated 12% to 18% of people 60 and over have some type of mild cognitive impairment, according to the Alzheimer’s Association. They are also more likely than adults aged 30-64 to answer the phone when they receive a call from an unfamiliar number, according to Pew Research.
Common Scams Involving Seniors
According to the National Council on Aging, which reports on issues affecting the elderly, the scams that target senior citizens include:
- "Sweetheart" or romance scams: Criminals create fake profiles on dating apps and websites, luring in a lonely single senior. After building a relationship, the scammer asks for money for an emergency, or another ruse. This was the costliest fraud involving seniors in 2020, which the FTC reported caused $139 million in losses.
- Government imposter scams: A caller poses as an official of the Social Security Administration, the Internal Revenue Service or the Centers for Medicare and Medicaid Services, threatening arrest or legal action unless fees are paid.
- Friend imposter scams: A criminal who may know the senior offers to run their errands, or help them around the house, but eventually begins managing their financial accounts and diverts payments to themselves.
- Online shopping scams: The combination of isolation from the pandemic and the boom in online shopping has prompted an increase in fake online stores, apps or social media ad. Sometimes low quality merchandise is delivered, but often no merchandise is sent. According to the FTC, online shopping scams increased by 129 percent in 2020, compared to 2019.
- Grandparent scams: An imposter pretending to be a grandchild in trouble asks for emergency funds.
- Email/phishing scams: A senior or retiree might get a message that appears to be from a legitimate organization, asking them to update or verify their personal details. The recipient gives these details to someone with bad intentions instead.
Warning Signs of Potential Elder Fraud
Financial firms were given immunity under the Senior Safe Act of 2018 to report suspected elder abuse without fear of violating a customer’s privacy. The law is designed to make it easier for authorities to obtain necessary documentation of elder fraud. Here are some of the red flags that could alert you to suspected senior fraud.
- There are big withdrawals from an account that hasn’t seen much activity
- They suddenly open a new joint account or add a new signer to an existing account
- There are new credit card balances
- They have new "friends" accompanying them to the bank
- They’re trying to wire large amounts of money
- They’re writing checks to someone unfamiliar
- There are unpaid bills
- They’re closing CDs or other savings accounts
- Their bank and credit card statements no longer come to the house
- They’re getting new credit cards
- A caretaker, relative or friend suddenly starts making financial transactions on behalf of the older person without proper documentation
- There’s a sudden change in the senior’s lifestyle
- Their power of attorney or will has changed under unusual circumstances
What You Can Do
Elder fraud frequently goes unreported because the senior often knows the person who is committing the fraud, or they may be ashamed to have been caught in a scam. You can help seniors avoid these risks by discussing possible scams, helping them find a reliable financial advisor who can monitor their accounts against fraudulent activity and ensure they have an estate plan in place.
Staying connected with senior friends and relatives can go a long way toward spotting problems before they become a serious issue. By being alert and involved with their lives, you can become a helpful resource to protect them from being a fraud victim.